This three-part series began with a discussion of how the health insurance process is structured for older adults. The second column discussed the choices around Medicare, supplements and managed care encompassing Medicare. The final column in this series will focus on other types of insurance that older adults may purchase or for many, already have but are unsure what to do with them.
Although not considered health insurance such as Medicare or Medi-Cal, another insurance product that older adults may have is long-term care insurance (LTC). Offered through major insurance companies, the State of California (CalPERS) and the federal government, long-term care insurance began 35 to 40 years ago and was routinely considered “nursing home insurance.” The purpose of this insurance was to pay for a person’s stay in a skilled nursing facility,more commonly called a nursing home. It would begin paying a flat rate towards the daily rate of the nursing home but would only pay for nursing home care after the required three-day hospital stay and after Medicare benefits were expended at the nursing home. These early LTC policies were written with a narrow focus, covering only nursing home placement, and were not widely popular due to individuals reluctant to go into a nursing home for the duration of their life or at all. Individuals continue to affirm the wish to remain in their own homes.
In the late 1980s long-term care insurance was buoyed by more marketing and began to expand the product to offer better plans that were less costly and included community-based care in addition to a nursing home. Insurance sales people were trained and pushed numbers of healthy older adults to purchase long-term care insurance. The products became more numerous but a major drawback was that the companies would only enroll healthy adults. A diagnosis of high blood pressure or another common health condition for older adults would disallow the individual for insurance. Couples could apply but were looked at separately with one qualifying; the other being denied for a minor health condition that has not impacted his/her quality of life.
Fast forward to the current day. The healthy older adults that purchased these policies 25 years ago are now in a position to file a valid claim. Many are in their 80s with health issues beginning to impact their ability to live independently. The insurance companies that originally wrote the policies have been collecting premiums for 20-plus years. However, as claims are made, processed and paid, some of the same companies are selling their LTC insurance division to other companies and not issuing new LTC policies. LTC products are still out there but have a different look than in the past to make it affordable to the customer and to the insurance company.
Since many people purchased their LTC policy years ago, the policy has probably been put away and almost forgotten. The only reminder may be the quarterly or annual premium notice or the question asked by your CPA about LTC premiums when tax time rolls around. It is unlike Medicare or another healthcare supplement. A hospital stay for an extended illness or an accident such as a broken hip may considerably alter an individual’s abilities. This is a good time to look for the policy, see how it’s written and what it covers. Note: If you have a policy, let your adult children or Power of Attorney know of its existence. If you are in the hospital for a serious health event, they will know you may have coverage that will help pay for care once you’re discharged.
Working with many different companies over the years, I have found the claim process similar with all companies. The LTC policy will have a phone number (usually toll-free) to call to start the claim. The insurance representative will send the claim forms or tell you where on the company website the claim forms can be downloaded. The claim forms should be fully completed and quickly returned to the insurance company. Depending on the age of the claimant, the policy and the company, the next part of the claim requires validation that the policyholder actually needs the care (based on their abilities to independently do daily tasks). The insurance company may send a nurse out to do a face-to-face assessment or they may require the individual’s physician to fill out a form verifying the need for assistance in the home and return it to the company. Whichever the case, it is very important to be completely honest about what this person can or cannot do. If the individual is physically healthy but has memory deficits or Alzheimer’s disease, it’s critical that supervision be emphasized as it may be unsafe to leave them alone. Tasks of daily living include feeding, dressing/undressing, using the toilet, taking a bath/shower and walking. Other considerations include shopping, meal preparation, paying bills and light housework.
This beginning part of the process can take several weeks but should not deter the client, Power of Attorney or the family from pursuing the claim. Once the assessment or physician’s statement is received, the insurance company makes the determination of benefits and sends a letter to the claimant. The letter will state the number of deductible days needed before benefits are available, how much the policy pays and any limitations: daily benefit, length of policy term, etc.
By this time the individual has been home for some time and has needed help in their rehabilitation and daily tasks. If a licensed home care agency has contracted with the client/family to provide assistance during this time, the long-term care company will usually honor the invoices from the date the person was discharged from the hospital or skilled nursing to home. The home care company must provide company information, licenses, client information and case notes to the company. If the client/family hires an individual privately or a family member is providing the care, it may not meet the criteria for the LTC company and they may refuse to reimburse the policyholder.
Accessing benefits for long-term care insurance can be a lengthy, frustrating process. Companies, reluctant to approve a “lifetime” or “unlimited” claim may put unspoken roadblocks in the way of approving the claim. Typical scenarios include not receiving the paperwork. (Always keep the original and make copies to send to the insurance company.) Consider sending the claims paperwork by certified mail so you’ll have a signature and return receipt accepted when next discussing with claims representatives. Daily case notes attesting to tasks completed are another way of assuring client’s needs are being met but also must conform to the home care agency’s protocols and the insurance companies’ requirements. In most cases these must be sent with each invoice monthly. An annual reassessment is also required either by the physician or another R.N. making a home visit. There can be many hoops that a client/family may have to jump through to actually get this claim in, approved, deductible days met and payments begun. Note: Deductible days must be used up (60 to 180 days) before the company will begin to pay. In almost all cases, these are service days (actual number of days care was provided) versus calendar days. The deductible days may be waived if the person has a terminal illness and is under hospice care.
In some cases families discover a long-term care insurance policy while going through paperwork of a deceased family member. This may complicate the claims process considerably and the insurance company may or may not pay the claim (depending on how the policy is written) but families are encouraged to gather all invoices to try to substantiate a claim for payment after the fact.
Purchasing long-term care insurance for healthy adults in their 40s to early 60s is still a good idea to help with retirement planning. Clients and their families who have this insurance know that once approved, this benefit is able to extend the individual’s ability to remain at home for a much longer period since most policies include a community care benefit. These benefits pay for a daycare facility, care in the home, an assisted living facility and within a nursing home. The companies that sell these products have fine tuned the application process but also are offering different types of policies and benefits that make them more affordable to a larger segment of the general public. A word of caution, however; when purchasing a policy consider the expense long term into the budget. It is unwise to purchase the policy, pay the premiums for a number of years only to drop the policy in a person’s older years due to expense.
Switching to another type of insurance, let’s discuss life insurance. It was fairly common years ago to purchase a life insurance policy or policies to help financially upon the person’s death. These policies particularly if sold as “whole life” policies are probably paid up and are tucked away in the file cabinet or safe deposit box. Most of the time they are forgotten until a person’s death but can be accessed earlier in several different ways.
First, the policy must be found, read and understood: type of policy, the beneficiary (this may need to be updated) and the benefits. Loans against the policy are possible if an event occurs and funds need to be accessed. There should be a claims number on the policy or search under the company website to call and get more information.
Another possibility, relatively new within the last few years, is to convert the death benefits of a life insurance policy into a long-term care benefit that will pay monthly benefits to the individual in lieu of full death benefits paid upon the person’s death. There are companies that will purchase these policies keeping a percentage of the policy. For instance, an example from one company states that a $100,000 life policy would convert to $4,500/mo. for nine months with a $5,000 funeral benefit. As you can see from the numbers, this decision would not be for everyone but it’s important to understand all the aspects should this be proposed.
Purchasing insurance in later years should not be a decision taken lightly. Whether it is changing health insurance during open enrollment i.e., Medicare to Medicare Advantage, or changing a supplement, do your homework. In many cases, insurance companies are more reluctant to write a new policy on anyone older than 80 since at that age older adults access healthcare services more often than ever. If you have long-term care insurance now and are still healthy pay attention to the possible rise in premiums and perhaps consider a lesser LTC policy but do not drop the insurance in its entirety, particularly if you’ve paid in premiums for 15 to 30 years. It’s money down the drain. Talk to a reputable insurance agent about your options and include a trusted family member who can help you decide what to do. Sooner or later, you or your family will be able to access the benefits to help.
Carol S. Heape, MSW, CMC , is CEO of Elder Options, Inc. serving the Sacramento Region and South Lake Tahoe with Care Managed Home Care since 1988. www.elderoptionsca.com